Alpha Insights

The Alpha Investing quarterly letter outlining macroeconomic trends, asset updates, and our view on the current commercial real estate landscape.


Past Insights

Spending Grows as Commercial Activity Slows

2023 ended with stronger than predicted economic growth, low unemployment, and moderating inflation. Although consumers and businesses feel better about the economy compared to the start of last year, there remain risks to economic growth and inflation. At the same time, the CRE market continued to cool, with lower transaction volume & pricing.

GDP Growth Complicates the Path Forward

The US economy continues to grow at a faster pace than expected, despite higher interest rates. However, there are increasing risks and uncertainty stemming from prolonged tighter credit conditions, political dysfunction, and geopolitical tensions.

Economy Remains Resilient but Continues Cooldown

Despite interest rates increasing at the fastest pace in nearly 40 years and inflation still running at elevated levels, the US economy has been more resilient than expected due to the strong labor market and healthy levels of consumer spending. The Fed is in a difficult position to achieve its long-term goal of price stability as inflation is running higher than it would like despite the economy continuing to show signs of moderating.

Fed Continues Fight Against Sticky Inflation

Following a year of aggressive monetary policy by the Fed, both inflation and the labor market are showing signs of cooling. However, inflation remains higher and the labor market remains tighter than the Fed would like. Furthermore, the recent turmoil in the banking industry has exacerbated the Fed’s challenge of cooling the economy without overtightening.

2022 Year End Update

The Fed moved to curb inflation by rapidly raising interest rates, taking them to their highest levels since 2007. Although inflation has shown signs of moderating, the labor market has remained strong, putting the Central Bank in a difficult position as it attempts to bring inflation back to its 2% target without causing a recession.

The Current Commercial Real Estate Landscape

The Federal Reserve (the “Fed”) continues to move more aggressively in an effort to tackle inflation that remains stubbornly high. The Fed has raised its benchmark interest rate five times in six months from near zero to a range of 3%–3.25% in September, the highest level in 15 years, and signaled additional rate hikes through the end of the year.

Inflation, Supply & Demand Imbalance, Cloud Growth Prospects

The US economy has continued to grow, albeit at a slower pace due to inflation, continued supply chain obstacles, and the geopolitical uncertainty stemming from the prolonged crisis in Ukraine. Near-term headwinds, led by inflation, cloud future growth prospects.

2021 Year End Update

Despite the ongoing global pandemic over the last two years, the US economy has continued to grow for the sixth consecutive quarter. However, new variants continue to complicate the recovery.

The Current Commercial Real Estate Landscape

While the post-COVID recovery is well underway, the coronavirus and its variants continue to affect consumer and business confidence and behavior. GDP grew in the third quarter, for the fifth consecutive quarter, although the pace of growth was slower compared to the second quarter.